By Naveen Athrappully
Fannie Mae and Freddie Mac unveiled new rules for mortgages that will help in reducing homeowners insurance bills for millions in American families, especially in condos and rural areas, the Federal Housing Finance Agency (FHFA) said in a March 18 statement.
According to the agency, which is responsible for the overall management of Fannie Mae and Freddie Mac, a key change relates to Actual Cash Value (ACV) and Replacement Cost Value (RCV) coverage for homes.
An ACV policy pays for the cost of repair or replacement of part or whole of a homeowner’s property, accounting for depreciation of the asset. In contrast, an RCV policy pays the full repair amount using materials of similar quality and kind, without considering depreciation.
For instance, if a home suffers $15,000 worth of damage, an RCV policy will shell out $15,000 to repair the home, minus the insurance deductible, while ACV policies pay less after considering depreciation and the current value of the property.
However, full RCV coverage for roofs has become “ridiculously expensive and hard to find in many states,” FHFA said. This presents a challenge to homeowners seeking insurance. By allowing ACV coverage for roofs alone, the problem gets fixed.
“Fannie and Freddie will now accept Actual Cash Value (ACV) coverage on roofs for single-family homes and condos,” the agency said. “The rest of the house still gets full Replacement Cost Value (RCV) protection—meaning it will be rebuilt brand-new if disaster hits.”
According to FHFA, condo buildings can now opt for the cheaper ACV roof coverage. Plus, a complicated rule related to insurance deductibles has also been simplified.
The changes allow many condo buildings, which were getting priced out of the mortgage market, to qualify for mortgages.
Fannie Mae and Freddie Mac are also scrapping out an unnecessary rule from 2024 that would have pushed up insurance costs and slowed down claims.
“These updates mean lower monthly payments, more first-time buyers able to close on homes, and rural communities keeping access to insurance they were at risk of losing. Homeowners still get strong protection—just at prices that actually make sense in 2026,” FHFA said.
“Bottom Line: if you’re buying a home or condo, or already own one with a Fannie or Freddie mortgage, your insurance bill just got easier to swallow.”
The National Association of Mutual Insurance Companies (NAMIC) welcomed the decision in a March 18 statement.
In February 2024, the previous administration decided to prohibit homeowners’ insurance policies from settling roof claims in ACV without any formal rulemaking process or stakeholder inputs, NAMIC said.
The 2024 decision “required properties with a federally backed mortgage to have full replacement cost value homeowners insurance, the highest level of coverage. Such coverage comes at a higher cost, and the guidance change worked as a de facto regulation barring other, more affordable, state-regulated insurance products that factor in depreciation,” the association said.
The recent update will “help ease the costs of homeownership,” according to NAMIC.
Insurance Costs and Roof Claims
Fannie Mae and Freddie Mac’s latest decision comes as homeowners’ insurance costs have significantly increased.
Home insurance climbed an average of 12 percent across the United States last year, pushing the national average cost to $2,948 by the end of 2025, according to a March 18 statement from online insurance marketplace Insurify.
“The average homeowner now pays $900 more per year for home insurance than they did in 2021,” the company said. “Since 2021, home insurance rates have soared 46 percent.”
In six states, insurance rates rose by 20 percent or more last year—South Carolina, Oklahoma, Nebraska, Iowa, Colorado, and Minnesota.
In 2026, Insurify predicts the average annual cost of home insurance to increase by an additional 4 percent to hit $3,057 by the year’s end.
Roof claims are a key part of homeowners’ insurance claims. Roof-related items made up over 25 percent of all residential claim value in 2024, data analytics company Verisk said in an April 8 statement.
In 2024, the cost of roof repair and replacement totaled almost $31 billion, up almost 30 percent since 2022, the company said.
By allowing ACV policies for roofs specifically, the Trump administration plans on helping lower insurance costs. In the FHFA statement, agency Director William J. Pulte said, “lower insurance costs and mortgage rates shrink the monthly payment of a new mortgage, giving new homebuyers confidence that they can afford the American dream.”
Unlike insurance costs, mortgage rates have dropped over the past year. For the week ending March 11, the average weekly mortgage rate for a 30-year fixed-rate mortgage was 6.11 percent, according to data from Freddie Mac. This is down from the 2025 peak of 7.04 percent hit in January that year. Rates have been on a decline since then, making homes more affordable.
According to a March 12 statement from real estate brokerage Redfin, a person who bought a home for $500,000 in October 2023 at that time’s mortgage rate of 7.8 percent will be making roughly $3,700 in monthly mortgage payments on a 20 percent down payment. If they refinance at 6 percent, the monthly payment falls by $500 to $3,200.
